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"Hong Kong is a free and open society. All political parties which have the support of Hong Kong people should be allowed a voice in the process of the political transition."
She welcomed Director Lu Ping's recent remarks that all political parties including the Democratic Party could participate in post-1998 elections provided they complied with local laws.
Mrs Chan said the transition of the Executive arm of the Government was another important issue.
"As the head of the 190,000-strong civil service, I have emphasised to Chinese leaders during my visits to Beijing the need to preserve the essential meritocracy and political neutrality of our civil service.
"The civil service is well prepared for the transition - virtually all key posts are now filled by qualified local officers who under the Basic Law can continue to serve after 1997.
"Indeed, Chinese leaders have made it clear that they hope all civil servants will continue to serve the future SAR," said Mrs Chan.
Concluding her speech Mrs Chan said the difficulties which Hong Kong might encounter in the final phase of transition would not extinguish its indomitable spirit of progress and its will to win.
"Given the strength of our economic fundamentals, China's massive economic, political and diplomatic self-interest in a successful Hong Kong, but above all, the determination of Hong Kong people to succeed, and with their proven track record of beating the odds, I am sure in my own heart that we will get there," she said.
The Chief Secretary said she expected Hong Kong's friends and trading partners, including the Americans, would maintain an interest in and be with Hong Kong all the way.
San Francisco is the second leg of Mrs Chan's three-week long, seven-city tour of the United States.
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